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Forbes.com

 

Health Care Reform 2.0. In Search Of Credible Alternatives

August 15, 2014

By Yevgeniy Feyman

President Obama's signature legislative achievement, the Affordable Care Act (Obamacare) marks the single biggest change to the U.S. health care system since the passage of Medicare and Medicaid nearly five decades ago. And while the law has expanded insurance coverage in 2014, it has also unleashed a stampede of new costs and regulations.

Republicans, for their part, have proposed serious alternatives to Obamacare—but until recently have mostly focused on voting to repeal the law, rather than substantively correct it. Yet with midterm elections looming and decent odds of retaking the Senate, Republicans can coalesce around a different strategy: daring the President to sign real reforms of the ACA.

What would real reforms look like?

Most would-be reformers want to see a more “market-friendly” health law. Earlier this year, Senators Coburn (R-OK), Burr (R-NC), and Hatch (R-UT) proposed a set of reforms (the Patient CARE Act) which would ultimately deregulate many elements of Obamacare, while slightly expanding insurance coverage (about 1 percent when fully implemented).

A more radical proposal—authored by a number of distinguished health economists and published by the American Enterprise Institute (AEI)—would institute a form of fully-subsidized, universal catastrophic coverage, while eliminating the tax advantage of employer-sponsored coverage.

Both approaches have their merits, but in a just-released proposal, my Manhattan Institute colleague Avik Roy offers yet another approach: using Obamacare's exchanges to fundamentally reform America's bloated and crushingly expensive health care programs.

Certain ideas in Roy's Universal Exchange Plan are similar to the Patient CARE Act: lowering insurance plans' base requirements; allowing greater flexibility in plan offerings (and pricing); and making insurance plans less expensive overall. And like the Patient CARE Act (and the German system), Roy's proposal would eliminate the individual mandate in favor of a far more limited open-enrollment window.

Roy's Universal Exchange plan, however, would not require repealing ACA—making it less disruptive politically, and a more viable alternative given how many Americans will be enrolled on the exchanges by 2017 (the next time Republicans will have a shot at the White House).

The Universal Exchange Plan (like the AEI approach) also makes more significant changes to Medicaid, migrating the acute-care Medicaid population to the exchanges, while making states fully responsible for their long-term care population (saving states money, on net, in the process).

Nor are the long-term care enrollees left in the cold. Under the Roy plan not only do they become eligible for premium subsidies—instead of the ACA's cost-sharing subsidies, which reduce deductibles— government-funded HSA contributions (similar to the successful Healthy Indiana Plan) are also on offer. In addition, the Universal Exchange Plan features a massive overhaul of Medicare, transitioning future retirees to subsidized exchange plans.

Stephen Parente, a health finance professor at the University of Minnesota (who also scored the Patient CARE Act) modeled Roy's Universal Exchange Plan: over 10 years coverage would increase by 12.1 million more people than under ACA; the deficit would be reduced by $29 billion (while spending significantly more on the poor); and exchange premiums would be cut by about 18 percent. The plan's long-term fiscal impact would be more significant still, slashing the deficit by $8 trillion over 30 years.

Other important elements include malpractice and hospital reform, and changes to the Veterans Health Administration.

Including Roy's plan, there are now several credible paths for repealing or replacing Obamacare with a more market-oriented approach. The genius of his approach is that it recognizes the political “facts on the ground” while addressing not only the ACA's core flaws, but the many pre-Obamacare challenges that defined America's health care system.

Rather than simply attack the ACA head on, Roy thinks seriously about how to transcend it.

There's no guarantee, of course, that the Universal Exchange Plan will be the most viable conservative option going forward. But by providing Republicans (and reform-minded Democrats) with a menu of far reaching and well thought out tools for moving beyond trench warfare over the ACA, he might just have found a way to end the stalemate.

Original Source: http://www.forbes.com/sites/theapothecary/2014/08/15/health-care-reform-2-0-in-search-of-credible-alternatives/

 

 
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